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Games People Play with Cash Flow (2020)
One way that first principles thinking fails is when you build your analysis up from a deficient set of base principles. Everything is correct and true, but you still end up mistaken. Here's how that looks like in practice.
They executed a series of complicated financial manoeuvres a year or so after Malone took over, placing a large chunk of stock in a holding company to grant them majority control. He understood that if he used debt to finance acquisitions, he could keep growing the company, and use the depreciation on acquired systems (plus the write-offs from the loans itself) to delay paying taxes on that cash flow. Through a combination of logic, jawboning, and sheer force of presence, Malone persuaded Wall Street to take a second look at the cable industry, long shunned because of its nonexistent earnings and heavy debt addiction.
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